Adidas to sell-off long-struggling Reebok to focus on own brand

German sportswear group Adidas announced that it would be selling off its long-struggling US subsidiary Reebok, beginning its formal divestment process soon. This comes as a part of Adidas' new five-year turnaround plan under which the group has decided to focus its efforts on strengthening the Adidas brand. 

"Adidas has now decided to begin a formal process aimed at divesting Reebok", the group said in a statement without revealing the names of potential buyers.

According to Germany's Manager Magazin, China's Anta Sports and North Face owner VF Corp. had expressed their interest in acquiring Reebok last year. Adidas has said that the names of potential candidates will be divulged by the company at a meeting on March 10.

The German company had acquired Boston-based Reebok in 2006 hoping that it could take on US rival Nike. The deal had been hitched for 3.1 billion euros ($3.8 billion), however, Reebok failed to make a significant mark even after it collaborated with pop stars along the lines of Cardi B and Ariana Grande. 

"After careful consideration, we have come to the conclusion that Reebok and Adidas will be able to significantly better realise their growth potential independently of each other," said CEO Kasper Rorsted. "We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it," he added.

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Nearly 3 years ago, Adidas CEO Kasper Rorsted had put pressure on Reebok stating that it was 'clear that it has to improve significantly.' This, followed his facedown with shareholders who called for the sale of the loss-making brand which managed to record growth only outside of the US markets. 

The Coronavirus pandemic was another blow to the sportswear company with its sales down by seven per cent year-on-year to 403 million euros. During this period Adidas's sales went down by only two per cent to 5.5 billion euros. 

After several accounting write-downs, Reebok is projected to be currently worth around 800 million euros.

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(With Agency Inputs)